At the meeting, which was broadcast over the Internet, Ballmer told shareholders that while the world's biggest software maker is seeing growth in all of its business groups, it is "not immune" to the tough economic climate.

He repeated that Microsoft is looking for areas to cut costs, including hiring, which "points to much, much slower growth...in head count for the remainder of this financial year and I suspect into next financial year."

However, investment in research and development would continue, Ballmer said.

Microsoft, the world's largest software maker with more than 91,000 employees worldwide, has been on a hiring spree, adding more than 20,000 employees in the last two years.

Shares of Yahoo fell 19 per cent to $9.38, while Microsoft shares were down 3 per cent at $18.99.